Segmentation, Targeting and

Positioning

 Nivea
Avon

 General

Mills
Home Depot

 What

are some
commonly used
demographic,
geographic and
behavioral
descriptors?

 SAGA

segmentation of UK grandparents,
where a complete description of each
category can be found in this

Pharmaceutical industry
segmentation

Inline skating
segmentation

A Useful Tool for Assessing Market

Segments: Segment Rating Chart
WEIGHT

RATING (0-10)

TOTAL

Customer needs and behavior

.5

10

5.0

Segment size and growth rate

.3

2.1

Macro trends

.2

1.6

Total: Market attractiveness

1.0

Market attractiveness factors

8.7

Competitive position factors

Opportunity for competitive advantage

.6

4.2

Capabilities and resources

.2

1.0

Industry attractiveness

.2

1.4

Total: Competitive position

1.0

6.6

The Market Attractiveness/

Competitive Position Matrix
Market
Attractiveness
High
(8-10)

Moderate
(4-7)
Low
(0-3)
Low
Moderate
High
(0-3)
(4-7)
(8-10)
Companys Competitive Position

= Market attractiveness and competitive position of distance runners segment

Implications of Alternative Positions

Within the Market-Attractiveness/
Competitive-Position Matrix

Market Attractiveness

Weak
High

Med.

Low

Build selectively:
Spec. in limited strengths
Seek to overcome weak.
Withdraw if indications of
sustainable growth are
lacking
Limited expansion or
harvest:
Look for ways to expand
w/out high risk; otherwise
min. invest. and focus
operations

Competitive Position
Medium

Strong

Desirable Potential Target

Protect position:
Invest to grow at max.
digestible rate
Concentrate on maintaining
strength
Desirable Potential Target
Manage for earnings:
Build selectively:
Protect existing strengths
Invest to improve position only Emphasize profitability by
increasing productivity
in areas where risk is low
Build up ability to counter
competition
Desirable Potential Target
Invest to build:
Challenge for leadership
Build selectively on strengths
Reinforce vulnerable areas

Divest:
Manage for earnings:
Sell when possible to maximize Protect position
Minimize investment
cash value
Meantime, cut fixed costs &
avoid further investment

Protect and refocus:

Defend strengths
Seek ways to increase
current earnings without
speeding markets decline

Sources: Adapted from George S. Day, Analysis for Strategic Market Decisions (St. Paul: West, 1986), p. 204; D. F. Abell and J. S. Hammond, Strategic Market Planning Problems and
Analytical Approaches (Englewood Cliffs, NJ: Prentice Hall, 1979); and S. J. Robinson, R. E. Hitchens, and D. P. Wade, The Directional Policy Matrix: Tool for Strategic Planning,
Long Range Planning 11 (1978), pp. 8-15.

 Concentrated
Concentrate

Marketing

on the most attractive

segment
Undifferentiated
One

Marketing

marketing mix for all

Differentiated
Modify

Marketing

marketing mix for different

segments

Subway

What is Positioning?
A couple of definitions
Creating

distinct and valued physical

and perceptual differences between
ones product and its competitors, as
perceived by the target customer.
The act of designing the firms
market offering so that it occupies a
distinct and valued place in the
minds of its target customers.

Generic Competitive Strategies

Exhibit 7.1

Competitive Advantage

Broad Target

Competitive
Scope

Narrow Target

Lower Cost

Differentiation

Cost Leadership
Strategy

Differentiation
Strategy

Focus Strategy

Focus Strategy
(Differentiation
Based)

Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.

Comparison of Physical and

Perceptual Positioning
Analysis
Physical positioning
Technical orientation
Physical characteristics
Objective measures
Data readily available
Physical brand properties
Large number of
dimensions
Represents impact of
product specs and price
Direct R&D implications

Exhibit 7.3

Perceptual positioning
Consumer orientation
Perceptual attributes
Perceptual measures
Need for marketing research
Perceptual brand positions and
positioning intensities
Limited number of dimensions
Represents impact of product
specs and communication
R&D implications need to be
interpreted

Levers to establish
positioning
Simple physically based attributes
Single physical dimension such as quality,
power or size
Complex Physically based attributes
Concepts like roominess and User
friendly
Essentially abstract attributes
Not directly related to the physical
attributes, sexiness of perfume, prestige
Price

Steps in the Positioning

Process
Exhibit 7.4 (1 of 2)

1. Identify relevant set of competitive products serving a target

market.
2. Identify the set of determinant attributes that define the product
space in which positions of current offerings are located.
3. Collect information from a sample of customers and potential
customers about perceptions of each product on the
determinant attributes.

 Features
Benefits
Parentage
Manufacturing

Processes

Ingredients
Endorsements
Comparison
Pro

Environment
Price/Quality

Steps in the Positioning

Process
Exhibit 7.4 (2 of 2)

4. Determine products current location (positioning) in the product

space and intensity thereof.
5. Determine customers most preferred combination of determinant
attributes.
6. Examine the fit between preferences of market segments and
current position of product (market positioning).
7. Write positioning statement or value proposition to guide
development and implementation of marketing strategy.

 Look

for opportunities
Repositioning hard to do
Dont be too confusing (
Holiday Inn)

Discussion Question
3. Whats the tangible output of
the positioning process?

Positioning Statement for

Volvo
in North America

For upscale American families,

Volvo is the family automobile that
offers maximum safety
Generic format for positioning
statements: For (target market),
(brand) is the (product category)
that (benefit offered).

Value Proposition for Volvo

in North America

Target market: Upscale American

families
Benefits offered: Safety
Relative price: 20% premium to
domestic family cars
Generic format for value propositions:
Target

market
Benefits offered (and
sometimes not offered)
Relative price

Some Key Questions

Concerning Positioning
Decisions
For

whom are they written?

In what sort of language?
Should they focus on features
or benefits?
How many differentiating
attributes should anchor them?

A Useful Tool for Positioning

Decision Making: Perceptual
Maps
Not Sweet

Sweet
Nutritious

Not Nutritious

Where would you plot your favorite cereals?

Your kids favorites? Your grandmas?

Discussion Question
4. What is positionings role
once a products positioning
strategy has been
determined?

Positioning Green
FedEX
Fast,

reliable on-time delivery

Southwest Airlines
Affordable, no-frills air travel
Rolex
Status-symbol fashion accessory
Ebay
The virtual marketplace to buy or sell
anything